Well, here we go again, another case of fraud in, or against, the leasing industry. Unfortunately, this is something that we have come to see on a fairly regular basis. It always is disappointing to find another example of greed and total disregard for the property rights of others. On the other hand, such situations provide me with an unending source of war stories for my training seminars and workshops.
When committing this type of fraud, a lessee orders equipment from a supplier, with whom it has an “understanding,” and then arranges for a lease of that equipment with a lessor. The supplier creates an invoice for the leased equipment and presents it to the leasing company for payment. This is the crux of the scheme – the equipment does not exist, except on paper. Needless to say, the supplier’s profit margin on the equipment is substantial. After all, the cost of goods is zero.
Lessors have learned to be less than trusting, though, so they require proof from the lessee that the equipment was actually delivered before they will cut a check to the supplier. The lessee, who is in cahoots with the supplier, is more than willing to sign the Certificate of Delivery and Acceptance (D&A) indicating they have received the equipment and it is in good working order. Once the lessor receives the D&A, it pays the supplier, who then shares the ill-gotten gains with its partner, the lessee. Sometimes an intermediary, or broker, is involved in the operation.
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Tracked on: January 16, 2006 1:47 AM | Permalink to Trackback